In this article we examine what makes a ‘good’ property market and take a look at where the market is right now. We want to help you decide whether to sell and buy now, or wait for more favourable conditions.

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When Is A Good Time To Buy A House?

If you’re in the early stages of planning your move, there are a few things you can do to see whether the market is currently in your favour. Being forearmed with information will help you decide whether to take the leap, or to wait until you can get a better deal.

House Prices

If house prices are going up, it’s generally a sign that the market is currently working in favour of sellers; house prices tend to go up when there are fewer homes than needed to meet demand so competition between buyers hikes up the price.

The area you are in will have its own variables too. Big cities are often among the most expensive areas for those looking to buy a home, whereas smaller, rural communities sometimes have lower property prices. Each area will experience house price fluctuations depending on what’s going on nearby, for example: a large infrastructure project, or investment into local amenities.

The Mortgage Market?

The mortgage market and property market depend very much on eachother. When interest rates are low buyers are more likely to be active,  whereas when there are few mortgage products available or interest rates increase, it becomes more expensive for people to borrow money, putting people off.

Whilst affordable mortgage rates can make it easier to buy a home, they can also cause greater competition because other buyers also want to take advantage of the favourable rates.

Housing Supply

According to Rightmove, 2 in every 3 properties currently for sale have been sold subject to contract. During the first three months of 2021, there were 14% fewer new properties put on the market than during the same period last year. This suggests a significant group of potential home sellers are reluctant to start the process.

Rural and suburban areas are currently the focus of the majority of demand. Newquay in Cornwall is a particular hotspot where more than 8 in every 10 houses for sale this year are already ‘Sold Subject to Contract’.

Those looking to buy a property in a city are likely to have more choice. London is one of the few areas where more properties are going to market than normal possibly a result of people moving out of the City to areas where houses are generally cheaper and larger.

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Why Are People Currently Reluctant To Sell?

Reasons why people are a bit more reluctant to sell their properties right include:

  • Covid

Many homeowners have been reluctant to start marketing their property because of the potential risk of transmission during the pandemic. With the easing of restrictions and the vaccination programme, it’s likely more people will be happy to get on with life again again soon.

  • SDLT Deadline

Some sellers have become cautious about marketing their property so close to the Stamp Duty deadline since Some sales will not complete in time meaning transactions falling through.

  • Financial Uncertainty

The economic impact of coronavirus has not yet been felt in full. Some people don’t want to make large financial decisions until they know what the future holds.

  • Competition

Many people selling their homes are also looking to buy. Some people are holding off until there’s more properties to choose from.

However, sellers that are putting their homes on the market right now, are finding that they sell incredibly quickly, and generally for much higher prices than they anticipated.

Are Changes Coming?

Many industry professionals have predicted that the end of lockdown restrictions will prompt sellers’ confidence in putting their property on the market, and having people to view.

There are signs that things are already improving; in the first week of March, Rightmove reported that new listings were only 5% lower than last year, a significant improvement from February, where the number of new homes was 20% lower than in February 2020.

RICS Market Survey showed similar results, finding that 29% more respondents thought that ‘appraisals were up on the same period last year’. This is a huge leap from decrease of -19% the month before suggesting a possible wave of new properties coming onto the market over the next few months.

RICS also reports that 42% of estate agents have seen an increase in new buyer enquiries during March, the highest recorded since September last year. . Compare Estate agents here.

Many estate agents mentioned the current levels of buyer demand being ‘unprecedented’  and that the ‘Lack of choice for buyers… is the main problem at the moment’. Compare Estate agent fees here.

Why So High A Demand?

Buyer demand has increased throughout the pandemic by:

  • Government Incentives

Such as the Stamp Duty Holiday, and the 95% mortgage guarantee.

  • Lockdown

People have spent more time at home which has encouraged many to reevaluate what they need from their homes.

  • Low Interest Rates

Interest rates are very low right now, making borrowing money to buy a house much more affordable.

House Prices

Due to the high levels of buyer demand and the low number of properties on the market, house prices have grown considerably over the past year. The Land Registry  reports that the average property price in January 2021 hit a high of £249,309, 7.5% higher than January 2020 – an increase of just under £20,000.

Nationwide said in their latest house price report that the support from the Government in the form of policy (like Stamp Duty, and the new Mortgage Guarantee Scheme) would probably continue to boost house prices, and the market generally, over the next six months.

They were more cautious in their longer term outlook. Some think that once the market begins to stabilise and the true economic impact of the pandemic is felt, house prices will fall.

Finally

The UK housing market is much better for sellers than buyers right now. House prices are high and there is major competition for the most desirable homes meaning it could be hard for buyers to find the right house, or get the best deal.

However, that doesn’t mean there isn’t potential for buyers to take advantage of the situation too. Many sellers are keen to move fast to ensure they meet the stamp duty deadline and, there are some areas where properties are regularly coming to the market where buyer demand is lower than usual.

If you want to buy a property now, we recommend getting independent financial advice before committing to a property or mortgage deal – particularly if you intend to move again in the next few years. They will be able to provide advice tailored to your financial situation, and explain whether there’s a risk of ending up in negative equity, should house prices fall.